Affording healthcare in America can be tricky if you’re not careful. Learn all about healthcare finance in this post.
With more than 40 million people across the country left uninsured, the biggest reason for staying uninsured is the price of health insurance. If you don’t know how to put together a plan for healthcare finance, you’re going to struggle to afford even basic care. While this might not seem like a big deal, the first time you end up bedridden over a sickness, you’ll realize this really is a big deal.
Here’s everything you need to know about planning for financing your healthcare for the next year.
Guide to Healthcare Finance Planning
Medical Bills Cause Bankruptcy
For the last few years, medical bills have been plaguing the personal finances of families around the country. Tracking the leading causes of bankruptcy that have hit people across the U.S., it turns out that medical bills have been one of the biggest problems. With more than 2 million people claiming bankruptcy over medical debt, credit cards, student loans, and personal loans can’t match what medical debt does.
It turns out that, as Americans continue to live paycheck to paycheck, most families can’t handle an emergency. Even a $400 emergency is too much for half of American families to handle. When medical bills end up totaling up to the tens of thousands, many families seek out other forms of financing.
This is what makes insurance so important. Before you start budgeting for your medical expenses, start with a good insurance plan. If your family has a history of health problems or if you’ve got young children, you need an affordable deductible so that you can bring them in when they need it.
Make sure that your premiums are within your grasp without being so low that your deductible is out of reach. This is a delicate balancing act that every family needs to do in order to stay afloat while remaining protected. Check out a medical cost calculator online to figure out how much you need to have.
Getting To Know Private Insurance
Across the country, there are hundreds of private health insurance companies that offer coverage of all types. These companies are in both the for-profit and the non-profit sector. Every state has a few main insurers that operate within their borders.
If you work for a large company, it’s likely that your boss provides you with insurance. These costs are split between the employers and the employees as an added incentive for working for a given employer. Employers like it because the money they spend on you isn’t taxable, which gives them an added benefit for offering it to you.
In this way, the government partially subsidizes the insurance your employer buys for you.
The alternative to employer-provided or individually funded insurance is to go through one of the government healthcare exchanges. These marketplaces are where private companies offer special plans at a discounted price. When an employer doesn’t provide insurance, people who make an average or less than average wage get help buying a plan from the government.
By providing tax and wage information, people have the chance to get subsidies from the government. If you make less than a certain amount per year, the government provides you with credits toward a plan on their marketplace. With their help, low-income people get high-quality coverage.
Strictly Government Insurance
Around the country, people with very low-incomes, on disability, or who are over the age of 65 qualify for the largest government insurance programs. Medicare and Medicaid are two programs that offer quality insurance to people who need it, regardless of income in some cases.
For people who are 65 and older, Medicare provides funding to supply insurance to people who need it. Elderly, disabled, and people with long-term dialysis treatment are able to receive care through this program. If you’re an older person with or without retirement funding, you qualify for this program.
For people under 65, there is the potential to qualify for Medicaid. This is a fund that supports people who are below the poverty level or who have disabilities. The Medicaid program provides support that ensures dignified care for people with the lowest incomes.
On top of this, there is the CHIP program for children. This gives children from low-income families who don’t qualify for Medicaid the ability to take care of kids. There are also special programs for veterans, run through the Veterans Health Administration.
Paying out of Pocket
When you can’t find care that’s covered by an insurance plan, then you need to pay out of pocket. For small dental charges, vision services, and specialists, this might be okay. But when large bills come, people end up borrowing or using credit cards to pay off those larger bills.
At some companies, flexible spending accounts help people pay for medical fees. With these accounts, a small amount of money gets deducted from each check. Un-taxed, it goes into an account to pay for healthcare expenses. This money doesn’t earn interest and anything that’s unused at the end of the year isn’t refundable.
With a health savings account, you earn interest on the money that you save. On top of that, the money isn’t lost at the end of the year if it’s not used. If you want to use this kind of account, you need to have a health insurance plan with lower premiums and higher deductibles than a regular plan.
This is why planning for your health insurance needs is so important-the system is complicated!
For funding that space where your Medicare ends and where your private funding will begin, look into choosing a Medigap policy.
Healthcare Finance is Complicated
If it seems like healthcare finance is complicated, you’re absolutely right. Until the market is fixed and made more user-friendly for the needs of the average consumer, we need to plan to stay protected.
For more information on how technology is changing healthcare, check out our latest guide.
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Author: Cathy Carter